Following the recent clean-up exercise in Ghana’s microfinance sector, Citi business News is learning that government is preparing to make money available for the Bank of Ghana to start cleaning the Savings and Loans Sector.
Last week the Bank of Ghana announced the revocation of the licences of 192 insolvent microfinance companies. In addition, licenses of another 155 insolvent microfinance companies that have ceased operations have also been revoked.
Speaking to Citi Business News on the impact of the recent action by the Central Bank, Banking Consultant, Nana Otuo Acheampong said such steps to clean up the financial system will help in building confidence amongst the general public.
“The application has gone to government for the release of GHC 7 Billion to resolve the Savings and Loans and Finance Houses. So as soon as government is able to give them the go ahead, they will start to resolve those sectors as well. With the benefit of hindsight the whole lot should have been done at the same time, but it was a question of money. Not ideal but what is been done is better than if nothing was done at all. All the steps being taken should help in building confidence in the system.”
137 Microfinance companies left standing
Ghana currently has 137 microfinance companies in good standing after about 347 of such institutions had their licenses revoked by the Bank of Ghana on Friday, May 31.
The central bank in a statement said the institutions whose licenses were revoked were either insolvent or had ceased operations.
The Bank of Ghana in the statement explained that new measures have been put in place to ensure that existing institutions remain structurally and administratively safe enough to continue with their businesses by complying with its regulations.
Thirty-Nine (39) microcredit institutions also had their licenses revoked by the central bank.
The BoG also disclosed that, as part of the other measures put in place to prevent the revocation of licenses of the microfinance companies in the future, the minimum capital requirements for the sector will be reviewed upwards.
The BOG also announced strict supervision of licensed institutions and enforcement of the regulatory requirements as well as introducing a proportional corporate governance and risk management directives.
31 microcredit companies to continue operations
Following the cleaning of the sector, a total of 31 microcredit companies will also continue to operate after the revocation of 39 microcredit companies.
GHc900 to sanitise microfinance sector
The BoG had earlier indicated that it had secured GHc900 million to begin sanitising the country’s struggling microfinance sector.
About 705,396 depositors of distressed or collapsed microfinance companies and rural and community banks (RCBs) risked losing some GHc740.5 million without some form of intervention.
The Governor of the BoG, Dr. Ernest Addison had also indicated that about GHc 7 billion will be needed for a full clean-up of the other deposit-taking institutions like the savings and loans companies.
